Technical View: Nifty bounces back to form bullish candle; 15,950 a critical hurdle
The Nifty50 started on a healthy note and remained in positive terrain throughout the day, erasing most of the losses of the last two sessions on July 22.
The Nifty formed a bullish candle on the daily scale and negated its lower high-lower low formation of the previous two sessions.
Traders will be better off by remaining neutral on the index and should shift their focus on stock-specific opportunities, said Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory at Chartviewindia.in told Moneycontrol.
The Nifty appears to be still in a consolidation mode as it strongly recoiled from the lower end of the trading range present around 15600, he said.
This recovery was on the back of strong support, as the Nifty almost tested its 50-day simple moving average on July 20, adding more credence to the bounce, he said.
“Sustaining above 15,726 levels, the strength shall initially strengthened into the bearish gap zone of 15,837 –882 levels registered on 19th of July from where some selling pressure can’t be ruled out,” Mohammad said.
Even if the bulls manage to push through, the next critical hurdle is present around 15,950, hinting that upsides will remain capped for a while, he added.
India VIX fell 9.96 percent from 13.20 to 11.88 levels.
“Declines in the volatility indicates that the bulls are again holding the command and buying interest is seen at every meaningful declines,” said Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.
On the option front, Maximum Put OI is at 15,000 followed by 15,500 strike, while maximum Call OI is at 16,000 followed by 15,800 strike. Call writing is seen at 16,000 then 16,100 strike, while Put writing is seen at 15,800 then 15,700 strike. Option data suggests a broader trading range in between 15,600 to 16,000 zones.
“The Bank Nifty opened positive and while it surpassed its previous day’s high in the initial tick, it failed to cross key hurdle of 35,000 zones and dripped down to 34,557 levels. Banking stocks witnessed pressure and the index closed with gains of 260 points,” Taparia said.
It formed a Bearish candle on daily scale but negated its lower highs of the last three sessions. Till the index stays holds below 35,000, weakness will continue, with the next support at 34,250 and 34,000, he added.
On the stock front, a bullish setup was seen in Jubilant FoodWorks, Manappuram, JSW Steel, ICICI Prudential, Tech Mahindra, Muthoot Finance, Bajaj Finance, Bharti Airtel, Tata Steel, McDowell, L&T, Apollo Hospital, Wipro, Infosys, Titan, Godrej Consumer, Voltas, Colgate and SRF. Weakness was seen in Bajaj Auto, TVS Motor, Cipla and Biocon.
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